Possibly an entry pointToday may be a good time to take/add to an HVU position. Both Fed members George and Lacker speak today (both are strongly in favour of raising rates), Job openings were pretty good, now just waiting on the Beige Book. Tomorrow is jobless claims, and Fed member Kaplan (another hawk) speaks on the 9th.
Here's a little statistical work I'd like to share. I measured how many days it took for the $VIX to spike after a lull/trough in $VIX price. Data represents the past 10 years. From the middle of a $VIX trough, to the high of a $VIX spike, the average time that took was ~36 trading days (+/- 18.5 days (1 StanDev)) Here's a frequency distribution of how often those $VIX spikes occured within/after a certain period of time:
number of bins = 7, mean = 36.3438, sd = 18.5135
interval midpt Freq. rel. Freq. Cumulative Freq.
< 14.750 8.0000 3 9.38% 9.38% ***
14.750 - 28.250 21.500 11 34.38% 43.75% ************
28.250 - 41.750 35.000 8 25.00% 68.75% *********
41.750 - 55.250 48.500 8 25.00% 93.75% *********
55.250 - 68.750 62.000 0 0.00% 93.75%
68.750 - 82.250 75.500 0 0.00% 93.75%
>= 82.250 89.000 2 6.25% 100.00% **
The data suggests that 34.38% of the time, the $VIX spikes between 14.75 (~15) to 28.25 (~28) days after a trough, and, by the 28th days after a price-trough, 43.75% of the time you can expect a $VIX spike. Seeing as $VIX is ~20 days past it's 11.02 low, and 34 days past the beginning of the recent consolidation period, I think we're entering a window of time where we'd see the highest probability of a $VIX spike (hawkish Fed statements and seasonality probably tip the scale in HVU's favour). ~94% of the time, you can expect the spike to occur by 55 days (within two month from the low). The average $VIX spike is ~100% (or a 200% gain on HVU)), so perhaps this could help plan an exit strategy according to holding for another 20 trading days (~month) where one would average-in such that a 100% VIX spike would exceed the value of a losing position.
I'm certainly NOT advocating holding HVU for a long time; it is a hedging tool. These ETFs will always erode because of managment fees, rebalancing, etc. I'm long various positions as well. But holding the HVU for the next month is more likely to be seriously profitable than not.